Eskay Mining Corp. (TSXV: ESK) Aggressive Exploration Programs Planned on B.C. s Golden Triangle Initiating Coverage

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1 Siddharth Rajeev, B.Tech, MBA, CFA Anthony de Ruijter, BA May 15, 2018 Eskay Mining Corp. (TSXV: ESK) Aggressive Exploration Programs Planned on B.C. s Golden Triangle Initiating Coverage Sector/Industry: Junior Resource Market Data (as of May 15, 2018) Current Price C$0.23 Fair Value N/A Rating* N/A Risk* 5 (Highly Spec) 52 Week Range C$ C$0.51 Shares O/S 110,274,864 Market Cap C$25.36 mm Current Yield N/A P/E (forward) N/A P/B N/A YoY Return -32.4% YoY TSXV -3.0% *see back of report for rating and risk definitions. * All figures in C$ unless otherwise specified. Investment Highlights Eskay Mining Corp. s ( company, Eskay ) land holdings in B.C., Canada, surround the world-class Eskay Creek gold-silver mine, and are adjacent to Seabridge s (TSX: SEA) KSM gold-copper project, and Pretium s (TSX: PVG) Brucejack gold projects. The Eskay Creek mine had produced a total of 3.3 Moz of gold, &161 Moz silver at an average grade of g/t gold, and 2,231 gpt silver between 1994 and The company has identified four key target areas within its large 130,000 acre land package in the region namely the SIB, Red Lightning, North Mitchell and the Jeff-TV zones. Eskay has an option agreement with SSR Mining Inc. (TSX: SSRM) on the SIB property. SSR recently announced its decision to proceed to year two of a three year option agreement. The Red Lightning prospect is being tested for its potential to be a part of a number of mafic-ultramafic bodies along a 15 km long, and underexplored belt, running from Garibaldi Resources (TSXV: GGI) E&L deposit to Red Lightning. The company recently announced a financing for up to $1.10 million. Due to the early stage nature of the company s portfolio, we are not currently assigning a fair value estimate or rating. However, we believe Eskay is an attractive speculative play focused on an area that hosts some of the richest deposits in the world. One of the key advantages of the company is that it has already identified several highly prospective targets on its land package. Risks The current projects within the portfolio are in early stages of exploration. None of the projects have NI compliant resource estimates. Exploration and development risks. Volatility in commodity prices. Access to capital and share dilution.

2 Page 2 Overview Eskay Mining, headquartered in Toronto, Ontario, is focused on the Eskay Rift Belt in the heart of British Columbia s Golden Triangle, located 70 km northwest of Stewart. B.C. s Golden Triangle hosts some of the richest deposits in the world. The following maps shows the key projects in the area: Eskay holds 177 claims in the area covering 130,000 acres. Eskay s land holdings have multiple gold and silver showings, with copper, lead and zinc. Its holdings surround the Eskay Creek gold-silver mine, and are adjacent to Seabridge s KSM gold-copper project, and Pretium s Brucejack gold projects.

3 Page 3 Regional Map The Eskay Creek mine was operated by Barrick Gold Corp. (TSX: ABX). It was the second richest gold mine in Canada, and the fifth largest silver producer in the world. It is also considered to be the richest gold-rich VMS deposit in the world. The deposit was discovered in 1989, and produced from 1994 to The mine produced a total of 3.3 Moz of gold, and 161 Moz of silver at an average grade of g/t gold, and 2,231 gpt silver. Its extremely high grades allowed the mine to operate at a very low cash cost of just US$60 per oz. The following chart shows the mine s production history.

4 Page 4 Eskay Creek Mine Production Source: Barrick Gold Corp. Pretium commenced production at its BruceJack Mine in the summer of Seabridge s KSM project is one of the largest undeveloped gold projects in the world. Brief summaries of the two world-class projects are shown below: Source: Various Sources Eskay s Land Package The key targets on Eskay s land package are shown in the map below:

5 Page 5 Key Targets The following section presents details of the four key target areas. SIB Property In April 2017, the company signed an option agreement with SSR Mining Inc. (TSX: SSRM / market capitalization - $1.48 billion). As per the agreement, SSR can acquire up to 60% interest in the 4,400 ha (39 mining claims) SIB property. The property is currently jointly held by Eskay (80%) and Kirkland Lake Gold Ltd. / TSX: KL (20%). The SIB property

6 Page 6 accounts for approximately 9% of the company s total land package in the region. SSR can earn a 51% interest by spending $11.7 million in exploration over three years, with an option to increase its interest to 60% by completing a preliminary economic assessment or 23,000 m of diamond drilling. The property, which is along strike from the Eskay Creek mine, has several gold-silver occurrences over a strike length of 4 km. SIB has been extensively explored to shallow depths during the 1990s. Eskay completed shallow drill programs in 2002, 2008 and These programs showed that the Lulu zone, which is a part of the SIB property, is likely to hold a VMS style deposit with characteristics similar to Eskay Creek. Historic drilling returned up to 14.4 g/t gold and 1,060 g/t silver over 14.3 m, and 10.8 g/t gold and 766 g/t silver over 24.8 m. Drilling showed good potential for mineralization at depths below the Lulu zone and a regional fault, known as the Coulter Creek Thrust Fault ( CCFT ). Historic drilling results (2008), 30 m below the fault, showed 25.4 m at a grade of 2.12 g/t gold, 4.0 g/t silver, 0.17% zinc, and 0.13% lead, at 488 m depth. In October 2017, SSR completed a 9,336 m / 12-hole program. SSR s primary focus was on the unexplored part of the property beneath the fault. Drill holes averaged approximately 900 m, and were over a strike length of 1 km. Drill Hole Locations

7 Page 7 Drill Hole Locations Although high grades were not encountered, the results announced to date confirmed the presence of mineralization. All holes intersected favourable Salmon River Formation rocks, which resembles Eskay Creek Mine s host rocks. The program indicated two styles of mineralization - disseminated sulphides and polymetallic sulphide veins Drilling Results On January 22, 2018, the company announced SSR s decision to proceed with the second year of the three year option agreement. The 2018 drill program will likely focus to the west and south of the 2017 drill area. We consider SSR s decision to continue work as a major vote of confidence on the project s potential. Details of SSR s plans are yet to be announced. Eskay had recently engaged a Ni-Cu sulphide system expert, Dr. Peter Lightfoot, to review the historic work done on the Red Lightning area of Eskay s land package. See the maps on pages 3 and 5 for location. Dr. Lightfoot was recently involved in Garibaldi s discovery of the E&L Ni-Cu-PGE-Au-Ag massive sulphide occurrence, located just 20 km northwest of Eskay s land package.

8 Page 8 Historical drilling on Red Lightning conducted in 2008 had intercepted: m grading 0.79% Cu, 0.42% Ni and 0.08% Co from m to m, including 10m of 1.03% Cu, 0.55% Ni and 0.10% Co The following tables summarize the key results: The significant increase in cobalt prices in recent times prompted Eskay s management to review historic drill data and geophysical and geochemical surveys conducted in the area. The price of cobalt has increased from just $10/lb in late 2015, to the current price of $41/lb, reflecting an increase of approximately 310%. We have a very positive outlook on cobalt prices considering the strong expected demand growth from lithium ion batteries for electric vehicles, and because over 50% of current global cobalt production comes from the highly politically unstable Democratic Republic of the Congo Red Lightning On January 19, 2018, the company announced that Dr. Lightfoot s review confirmed that mineralization at Red Lightning is a magmatic nickel-copper sulphide system. The review also indicated that Red Lightning could be a part of a number of mafic-ultramafic bodies along a 15 km long, and underexplored belt, running from Garibaldi s E&L deposit to Red Lightning.

9 Page 9 Ni silt anomaly trending Eskay s management is planning an exploration program to evaluate the project s Ni-Cu- PGE mineralization potential. The exploration program will include VTEM airborne geophysical surveys, prospecting, reconnaissance mapping, and stream sediment and soil geochemical sampling along the Red Lightning trend.

10 Page 10 Proposed area of Exploration North Mitchell Block Eskay s North Mitchell Block, covering 1,446 ha, is located 2 km southeast of Seabridge s porphyry Au-Cu deposit, Iron Cap deposit, and from Pretium s Snowfield gold deposit.

11 Page 11 North Mitchell Block Mineralization Recent mapping of this area confirmed a Brucejack style exploration target. The stratigraphic units that host occurrences on the Brucejack property are present at North Mitchell. Management is planning a magnetotelluric survey, and additional geologic mapping, to identify drill targets. TV Jeff Zones The Jeff zone stretches over a 1.5 km long trend, 2 km south of the SIB. Historical drilling has intersected footwall and stratiform (VMS) mineralization similar to the Eskay Creek deposit. A 1991 drill hole had interested 4m grading 47.14g/t Au and g/t Ag. In addition, two holes intersected VMS-style mineralization, which returned: g/t gold and 53.3 g.t silver over 0.98 m, and 1.05 g/t gold, 29.1 g/t silver over 5.53 m, including 2.44 g/t gold, 54.0 g/t silver over 1.28 m.

12 Page 12 The TV zone, located 4 km south of the SIB, stretches over 1.2 km and has a similar mineralization to the Jeff zone. Drilling in 1995 intersected (VMS-style) 34.5 m of 1.79 gpt Au and 32.1 gpt Ag. Historical (1995) drill results are summarized below:

13 Page 13 Big Red The Big Red zone is another attractive porphyry Au-Cu-Mo-Ag exploration target (see map on page 3). 61 grab samples averaged 0.11% Cu, g/t Au, 1.8 g/t Ag and 0.035% Mo, with the best sample yielding 0.68% Cu, g/t Au and 6.2 g/t Ag. Grab Samples The company plans to conduct detailed geological mapping to potentially delineate zones of mineralization and alteration. Management Eskay s current management team was installed in October Management is led by Hugh (Mac) Balkam, a capital markets veteran and formerly with the Royal Canadian

14 Page 14 Mounted Police. Mr. Balkam holds over 11% of the total outstanding shares. Management and board members hold a total of million shares, or 18% of the total outstanding shares strongly aligning their interest with investors. Source: Management Information Circular Brief biographies of the management team and board members, as provided by the company, follow: Hugh M. (Mac) Balkam - Director/President/CEO Mr. Balkam was with the Royal Canadian Mounted Police for 13 years, many of those involved in the investigation of stock market related fraud. In 1981, he resigned to become a financial consultant with a major brokerage firm, where he managed investments for retail clients. Since 2004, Mr. Balkam has been involved in raising venture capital and consulting for junior mining companies. Mr. Balkam joined the Board of Directors and became CEO of Eskay Mining Corp during the fourth quarter of He holds a BA from the University of Toronto. Carmelo Marrelli - Chief Financial Officer Mr. Marrelli serves as the Corporation s Chief Financial Officer. Mr. Marrelli holds a Bachelor of Commerce degree from the University of Toronto and is qualified as a Chartered Accountant and as a Certified General Accountant in Canada. In addition to acting as the Corporation s Chief Financial Officer, Mr. Marrelli has been a principal of Marrelli Support Services Inc., a firm providing administration services to Canadian public companies, since February, 2009 and, prior to February, 2009, a partner with Marrelli & Drake Corporate Services (formerly Duguay & Ringler Corporate Services) (a firm providing administration services to Canadian public companies). Mr. Marrelli also serves as the Chief Financial Officer of several publicly-listed junior mining companies and as a director of Odyssey Resources Limited (TSX-V: ODX). Robert Myhill - Director Mr. Myhill is a director of six privately held companies operating in transportation and venture capital in B.C., Alberta and Ontario. From 1991 until 2006, Mr. Myhill was the President of Canadian Investors Corporation, an investment company focused on financing corporate re-organizations. Mr. Myhill actively participated in directorship and management of the investee companies. From 1985 to 1991, he invested in and raised capital for small companies in Ontario. From 1976 to 1984, Mr. Myhill was President of national companies within Southam Inc. Group and Jim Pattison Industries. He earned an HBA and MBA from the Ivey School of Business Administration at the University of Western Ontario and qualified as a Chartered Accountant with Price Waterhouse.

15 Page 15 J. Gordon McMehen - Director In 2000, Mr. McMehen co-founded Conundrum Capital Corporation, a private equity real estate fund management firm which today has several sectoral real estate funds under its administration. Mr. McMehen now serves as Chairman of Conundrum Capital Corporation. From 1998 to 2000, Mr. McMehen served as Executive Vice-President, Chief Operating Officer and director of Central Park Lodges Ltd., helping to manage one of North America s pre-eminent providers of seniors housing, long-term care and ancillary health care services. At the law firm of Gardiner Roberts, Mr. McMehen practiced corporate and commercial law from 1978 to 1998, specializing in mergers and acquisitions, corporate structure and finance. He acted as Managing Partner of the firm from 1994 to Mr. McMehen completed his undergraduate studies at the University of Toronto in 1972 and obtained an LL.B from the University of Ottawa in He was called to the Ontario Bar in 1978, and is a member of the Law Society of Upper Canada. Our net rating on the company s management team is 3.8 out of 5.0 (see below). Source: FRC The company s board has three members, of which, two are independent. The following table shows our analysis on the strength of the company s board.

16 Page 16 Strength of Board Source: FRC Financials At the end of Q3-FY2018 (ended November 30, 2017), the company had cash and working capital of $0.16 million and -$0.23 million, respectively. We estimate the company had a burn rate (cash spent on operating and investing activities) of $37k per month in the first nine months of FY2018. The following table summarizes the company s liquidity position: Data The company recently announced a financing of up to 2 million flow-through units at $0.30 per unit for gross proceeds of up to $0.60 million, and up to 2 million working capital units at $0.25 per unit, for gross proceeds of $0.50 million. Each flow-through unit will consist of a common share and half warrant (exercise price of $0.40 per share for two years). Each working capital unit will consist of a common share and one full warrant (exercise price of $0.40 per share for two years). The company currently has 9.76 million options outstanding (weighted average exercise price of $0.12 per share), and 0.60 million warrants (weighted average exercise price of $0.35 per share). Approximately 9.66 million options and none of the warrants are currently in-the-money. The company can raise up to $1.13 million if all these in the money options are exercised. Conclusion Due to the early stage nature of the company s portfolio, we are not currently assigning a fair value estimate or rating on Eskay s shares. However, we believe the company is an attractive

17 Page 17 speculative play focused on an area that hosts some of the richest deposits in the world. One of the key advantages of the company is that it has already identified several highly prospective targets on its land package. We believe that success on even one of the targets will have a positive impact on Eskay s share price. Risks We believe the company is exposed to the following key risks (not exhaustive): Projects currently in the portfolio are in early stages. None of the projects have NI compliant resource estimates. Exploration and development risks. Volatility in commodity prices. Access to capital and share dilution.

18 Page 18 Fundamental Research Corp. Equity Rating Scale: Buy Annual expected rate of return exceeds 12% or the expected return is commensurate with risk Hold Annual expected rate of return is between 5% and 12% Sell Annual expected rate of return is below 5% or the expected return is not commensurate with risk Suspended or Rating N/A Coverage and ratings suspended until more information can be obtained from the company regarding recent events. Fundamental Research Corp. Risk Rating Scale: 1 (Low Risk) - The company operates in an industry where it has a strong position (for example a monopoly, high market share etc.) or operates in a regulated industry. The future outlook is stable or positive for the industry. The company generates positive free cash flow and has a history of profitability. The capital structure is conservative with little or no debt. 2 (Below Average Risk) - The company operates in an industry where the fundamentals and outlook are positive. The industry and company are relatively less sensitive to systematic risk than companies with a Risk Rating of 3. The company has a history of profitability and has demonstrated its ability to generate positive free cash flows (though current free cash flow may be negative due to capital investment). The company s capital structure is conservative with little to modest use of debt. 3 (Average Risk) - The company operates in an industry that has average sensitivity to systematic risk. The industry may be cyclical. Profits and cash flow are sensitive to economic factors although the company has demonstrated its ability to generate positive earnings and cash flow. Debt use is in line with industry averages, and coverage ratios are sufficient. 4 (Speculative) - The company has little or no history of generating earnings or cash flow. Debt use is higher. These companies may be in start-up mode or in a turnaround situation. These companies should be considered speculative. 5 (Highly Speculative) - The company has no history of generating earnings or cash flow. They may operate in a new industry with new, and unproven products. Products may be at the development stage, testing, or seeking regulatory approval. These companies may run into liquidity issues, and may rely on external funding. These stocks are considered highly speculative. Disclaimers and Disclosure The opinions expressed in this report are the true opinions of the analyst about this company and industry. Any forward looking statements are our best estimates and opinions based upon information that is publicly available and that we believe to be correct, but we have not independently verified with respect to truth or correctness. There is no guarantee that our forecasts will materialize. Actual results will likely vary. The analyst and Fundamental Research Corp. FRC do not own any shares of the subject company, do not make a market or offer shares for sale of the subject company, and do not have any investment banking business with the subject company. Fees were paid by Eskay to FRC. The purpose of the fee is to subsidize the high costs of research and monitoring. FRC takes steps to ensure independence including setting fees in advance and utilizing analysts who must abide by CFA Institute Code of Ethics and Standards of Professional Conduct. Additionally, analysts may not trade in any security under coverage. Our full editorial control of all research, timing of release of the reports, and release of liability for negative reports are protected contractually. To further ensure independence, Eskay has agreed to a minimum coverage term including four reports. Coverage cannot be unilaterally terminated. 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